Some residential rate structures allow for one-time charges to be levied on residential customers when their peak power consumption exceeds certain thresholds in a given time window over monthly cycle. Residential demand charges can often be based on the highest 15-minute average usage recorded on a customer's meter within a given month. If a customer's home uses a large amount of power over short periods, a demand charges can comprise a larger part of that customer's bill. In other cases, there are regulations or physical limitations on the amount/ability to push excess power generated from on-site solar, for example back onto the broader electrical grid, either for monetization or relief. In these circumstances, there is no easy, automated way, for a customer to manage for these peaks and the customer can end up with materially negative effects to their utility bill.
The problem is that customers have no easy or automated way of changing their consumption pattern to adapt to peak demand charges through the course of a day. Typically, users have no idea when their total household power consumption is about to cross an instantaneous threshold that will incur extra charges. Because demand charges are based on total instantaneous household consumption, there is no one thing that consumers can do to automatically reduce power consumption in real time as would be required to avoid extra cost. Utilities want to encourage more of their customers to be conscientious of peak demand charges plans because it more closely associates the cost to generate electricity with the rate the customer is paying. It also helps alleviate power demands from power grids in the demand-heavy hours of the day. Key challenges of enabling adoption of these plans include helping customers (1) understand the implication of using a peak demand charge plan, (2) adjust their consumption pattern to align with the customer's specific plan, and (3) manage energy usage within that peak demand plan to automatically adapt to short energy changes.